September 12, 2025: In a landmark ruling offering significant relief to real estate developers, the Bombay High Court’s Goa bench has held that no Goods and Services Tax (GST) is payable on construction services under a joint development agreement (JDA) once the developer secures ownership of the land through conveyance.
The verdict, delivered on 21 August by Justices Bharati Dangre and Nivedita P Mehta, resolves a long-standing dispute over the point of taxation in JDAs. While the revenue department had insisted that GST became payable at the time of signing such agreements, developers had maintained that liability should arise only upon transfer of the completed property.
The case centred on Provident Housing, which contested a tax demand linked to a JDA and sought a refund of Rs 7 crore deposited under protest. The court noted that following the JDA, the landowner sold the entire parcel to Provident Housing via a registered conveyance, thereby extinguishing the original agreement. As the developer acquired ownership, no GST liability could be imposed.
Legal experts believe the ruling provides crucial clarity for developers engaged in JDA-led projects, a common structure in land-scarce markets such as Mumbai, Bengaluru and Hyderabad. “The judgment aligns GST liability with the actual transfer of property rights, reducing uncertainty. It reinforces that JDAs cannot be taxed upfront if the developer assumes ownership, which could have far-reaching implications for the sector,” said Abhishek A Rastogi, founder of Rastogi Chambers.
Currently, developers face an 18% GST burden in such arrangements, often without input tax credit, leading to higher costs passed on to buyers. As most land deals today are structured as JDAs with revenue-sharing, the ruling could influence affordability and pricing in an already expensive housing market.
Source: Economic Times
